The Clash of the Titans in Package Delivery: UPS & FedEx

The Trading Edge with Derek HoffmanWith all the chatter over the iPad release (See Apple launches off iPad to New Highs) and tax returns almost due, it is prudent to look no further than the the two companies known for expediting the delivery of today’s popularly urgent packages: UPS and FedEx.











UPS (NYSE: UPS): $64.07 per share

UPS Fundamentals

Market Cap: $63.64 Billion
Forward P/E: 18
Trailing P/E: 29.91
Revenue: $45.38 per share
Cash: $2.11 per share
Dividend: 2.90%

The Skinny at “Brown”

Atlanta-based United Parcel Service (UPS) employs over 400,000 people. On February 2nd, UPS issued forward guidance for 2010 expecting earnings per share in a range of $2.70 to $3.05.

In the recent quarterly conference call, UPS CEO Scott Davis said, “UPS has emerged from a very difficult year leaner, more focused and better positioned to take advantage of improving economic trends.” On February 2nd, UPS saw its quarterly earnings nearly triple from a year earlier. UPS displayed strong volumes of shipped goods ordered on sites like Amazon.com and BestBuy.com. As more consumers file their tax returns and purchase brand new tech devices online, stability and strength will be evident in UPS’ future numbers.

FedEx (NYSE: FDX): $92.19 per share

FedEx Fundamentals

Market Cap: 28.85 Billion
Forward P/E: 18.28
Trailing P/E: N/A
Revenue: $106.36 per share
Cash per share: $4.94 per share
Dividend: 0.50%

The Skinny at FedEx

Memphis-based Fedex Corp. (FDX) employs over 200,00 people. On March 18th, FedEx provided positive guidance. They forecast fourth-quarter earnings of $1.17 to $1.37 a share. The company also raised its earnings-per-share target for the year to a range of $3.60 to $3.80, from $3.45 to $3.75. Quarterly profit for FDX more than doubled due to a strong increase in Asia’s export volume.

Typically, FedEx shows strength at the start of an economic recovery. On the recent 3rd quarter earnings conference call, CEO Frederick W. Smith said the economic recovery ‘is well under way.’

UPS and FDX are benefactors of the April iPad craze as they work to bring the iPad to buyers’ doorsteps. Bellwether Apple’s (AAPL) impressive 1st day for the iPad, taking over 300,000 orders, is a sign those with jobs have loosened their wallets again for game changing tech devices.

These two shipping companies should also benefit from the procrastination of last minute tax filings. My FedEx delivery guy said he’s already seeing a pickup.

Continue to be selective in your stock selections. If you follow the delivery of in-demand items, you’ll be on the right track with your selections.

Disclosure: No positions in the companies mentioned.

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